Mid-county Manufacturing purchased a three-year insurance policy for $30,000 on January 2, 2013. Prepare any journal entries,

Question:

Mid-county Manufacturing purchased a three-year insurance policy for $30,000 on January 2, 2013. Prepare any journal entries, adjusting journal entries, and closing journal entries required on January 2, 2013, December 31, 2013, and December 31, 2014. Summarize these entries in T-accounts for Prepaid Insurance, Insurance Expense, Cash, and Retained Earnings. Assume the January 2, 2013, balances in these accounts were $0, $0, $90,000, and $80,000, respectively. Given only the entries for insurance, indicate what amounts would be reported for each of these accounts on the balance sheet and income statement prepared on December 31, 2013, and December 31, 2014.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...